Warrior Trading Blog

Sonic Corp | $SONC Stock | Shares Soar On Q1 Earnings Beat

Sonic Corp. (NASDAQ: SONC)

 

On Thursday January 4th, 2018, Sonic Corp., the nation’s largest chain of drive-in restaurants reported their first quarter earnings after the market closed at 4 p.m. Soon afterward, shares bolted higher after the company announced a rise in earnings from the prior-year period.

Shares traded somewhat subdued during the regular trading session closing at $27.57 or down $0.10 for the day. However by 8 p.m. shares had soared closing at $29.40 which was up 6.64% on the earnings figures.

The Numbers

Net income came in at $0.29 per share which beat the $0.25 per share analysts have been expecting.  One analyst actually nailed their guidance. It was Guggenheim that reiterated their by recommendation on December 28th-just one week ago, suggesting the price could see $29 to $31 near-term.

Not to be undone by some larger higher cap corporations, Sonic actually pays a hefty dividend of 2.36% annually. Add in the fact that 29% of the outstanding float of shares are short, and you have a recipe for a possible short squeeze and massive rally in the share price after this earnings announcement.

SONC Charts

Sonic

The above price chart shows the 5 minute price action during the regular session on the left and the aftermarket session on the right in the shaded area. Note how shares gapped up as soon as the announcement came out, then traded slightly higher and closed even higher as the 8 pm closing deadline approached.

Sonic

The above price chart shows Sonic on a daily time frame. The green oval area is where shares are indicated to be opening on Friday morning. Many eyes will be watching this one for the reasons stated above, the most important of which maybe the short interest float.

CEO Comments

Cliff Hudson, CEO of Sonic Corp. had this to say to investors:

“During the quarter, we promoted the Carhop Classic for $2.99, featuring our full-sized cheeseburger and medium hand-made onion rings, a value offering with a highly compelling price point, broad consumer appeal and strong quality differentiation. In addition to driving improved traffic, the introduction of a sharper everyday value message also improved value and quality scores from customers, validating our evolution to more focused and consistent national value promotions. We will continue to refine this strategy as we move through the remainder of the fiscal year, seeking to balance everyday value and consistent profitability for franchisees while staying true to Sonic’s core tenets of quality, differentiation and innovation . . .”

Company Profile

Sonic Corp. operates and franchises a chain of quick-service drive-in restaurants in the United States. As of August 31, 2017, the company operated 3,593 Sonic Drive-Ins in 45 states, of which 228 were owned and operated by the company and 3,365 were owned and operated by franchisees.

The company also owns and leases 135 properties; and sublease 53 properties to franchisees and other parties. The company was founded in 1953 and is headquartered in Oklahoma City, Oklahoma. -YahooFinance

 

IMAGE CREDIT